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February 10, 2016

More Brazilian Soybeans will be Exported out of Northern Ports

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Brazilian farmers have long suffered from some of the highest transportation costs in the world in order to get their grain to export facilities in southern Brazil. Farmers in central Brazil have been patiently waiting for the opportunity to move their grain north to the Amazon River in what is being called the "Northern Arc" of ports, which would reduce their transportation costs by approximately 30%.

Starting in a few months, their wait may be over. A new project called Hidrovias do Brasil (Waterways of Brazil) is scheduled to start operations barging soybeans that are produced in Mato Grosso to export facilities at the mouth of the Amazon River. Hidrovias do Brasil is the largest company to date to commence barging operations on the Amazon River. According to reports in Reuters, they will start receiving grain from Mato Grosso in February and March and then start barging operations in April and May with the first vessels loaded by July.

Hidrovias do Brasil have contracts with Noble Agri, Nidera, and Multigrain to barge their grain down the Amazon River. Noble Agri and Nidera are both controlled by the Chinese company Cofco and Multigran is a subsidiary of the Japanese company Mitsui.

The grain produced in Mato Grosso will be trucked north on highway BR-163 to the city of Miritituba where it will be loaded onto barges on the Tapajos River. From there the barges will proceed to the Amazon River and then to the mouth of the river and the port of Vila do Conde in the municipality of Barcarena near the city of Belem. Once there, the grain will be loaded onto ocean going vessels.

Hidrovias do Brasil estimates that when the entire US$ 1.5 billion project is completed and they have purchased all the barges and tug boats, they will be able to transport 6.5 million tons of grain per year. Bunge was the first company to begin barging operations at Miritituba in 2014 and they expect to move 4 million tons of grain when their project is completed. Other grain companies are in the process of buying land and building other facilities at the same location.

This is all being made possible by the asphalting of highway BR-163 from Mato Grosso straight north to the Amazon River. BR-163 was first constructed through the Amazon Rainforest in the 1970's, but it remained a dirt highway for decades which was essentially unpassable during the rainy season, certainly not passable by heavy trucks carrying soybeans.

Asphalting of the highway through the state of Para started in 2009 and it is expected to be complete by the end of 2016. Of the 990 kilometers between the city of Sinop in northern Mato Grosso and the barging operations at Miritituba, there are still 104 kilometers that have not been asphalted. Unfortunately, some of the older asphalt is already full of potholes.

Once the "North Arc" of ports are completed, the majority of soybeans and corn produced in Mato Grosso will be exported through these northern ports instead of being moved 2,000 kilometers south to export facilities in southern Brazil.